From Investment-Driven to Operation-driven: New Logic and New Ideas for Urban Renewal

"As urban construction enters the era of refined operation from extensive development, the urban renewal industry has broad prospects." Recently, at a public government event, Cai Songtao, secretary of the Xinyang Municipal Party Committee of Henan Province, attended the speech and expressed the importance of urban renewal work.

In fact, not only Xinyang, but also China City Daily reporters noticed that since the beginning of this year, all localities have been intensively implementing urban renewal actions.

Compared with the previous urban development model, what changes have been made to the underlying logic of urban renewal? What are the new variables emerging? What new ideas have local cities explored to solve problems? In this issue, China City Daily conducted an interview and research.

From "Is there any" to "Is it good"

By the end of 2022, the urbanization rate of China's permanent population reached 65.22%. This means that the goal of "increasing the urbanization rate of permanent residents to 65%" proposed in the 14th Five-Year Plan has been achieved ahead of schedule.

When the urbanization work enters the "second half" of shifting gears and improving quality, the center of urban construction work is also turning.

Yin Zhi, executive vice president of the China Institute of New Urbanization at Tsinghua University, said: "The reuse of the abundant stock assets left over from decades of large-scale construction is a very important issue. In this process, it requires both patience and better vision. ”

It is undeniable that in the era of "great development", real estate was the protagonist on the stage, and it was once unlimited. But time has passed, and the era of stock has begun.

Guo Xingtian, a deputy to the 14th National People's Congress and chairman of Wanhua Ecological Group, paid special attention to the important issue of urban renewal during his tenure. He believes that China's economic development model is shifting from investment-driven to operation-driven, and the past "large amount of construction, large consumption, large amount of emissions" and excessive real estate urban development and construction methods have become unsustainable.

Today, the consensus in the industry is that in the new repertoire, the participants will be more diverse.

"The subjects of different dimensions in urban renewal include the government, the market and society." According to Tian Li, professor and doctoral supervisor of the Department of Urban Planning of the School of Architecture of Tsinghua University, the core of urban renewal governance is the relationship between the government, the market and society.

From "One Main Force" to "Multiple Subjects"

On a late autumn night, at the beginning of the lanterns, Wu Chuanyan, chairman of Digital Light Smart Technology Group Co., Ltd. (hereinafter referred to as Digital Light), hurriedly left the table and rushed to the airport after attending a thank-you banquet in Xinyang, Henan Province. He has been in Xinyang for less than 24 hours, and he only came for a signing.

Just 2 hours ago, he signed a contract on behalf of Digital Light to become one of the main members of the Wanhua Eco-Urban Renewal Consortium.

In the afternoon of the same day, Wanhua Ecological Urban Renewal Industry Consortium was established in Xinyang. Representatives of nearly 30 enterprises from the fields of green finance, green energy, green home, green construction, digital city, and smart operation signed contracts on the spot to become the first batch of members of the consortium to work together to help urban renewal and development.

According to reports, the consortium forms a joint force with the mode of government-led, enterprise-oriented, industry organization promotion and social public participation, and realizes the "three ones" in the industry, that is, the only urban renewal industry consortium initiated by the main enterprise of the large home furnishing industry chain in the industry, and the only industrial consortium in the industry that specializes in providing top-level design, business planning, industrial introduction, and financial empowerment complete solutions for urban stock projects and assets. and the only industrial enterprise consortium in the industry with future-oriented green industry and low-carbon sunrise industry as the core of the organization.

"Joining the consortium is based on three considerations." Wu Chuanyan said in an interview with a reporter from China City Daily that first of all, the leader of the consortium is a leading enterprise with core technology in the large home furnishing industry chain, which can drive the innovation of the industrial chain from the source of the underlying materials; Secondly, the consortium can drive the upstream and downstream enterprises of the entire industrial chain to integrate a series of technical and ecological partners' products into an overall solution with industrial decoration as the scenario; Finally, the leader has the mind and concept of openness, inclusiveness, and serving the country with science and technology, which coincides with the values of Digital Light.

A reporter from China City Daily noticed that unlike some industrial alliances, there are also some capital representatives among the members of the Wanhua Ecological Urban Renewal Consortium.

When talking about the reason for joining the consortium, Liao Junhua, general manager of Shandong Bailu Chenxi Equity Investment Fund Management Co., Ltd., told a reporter from China City Daily that on the one hand, it is to recognize the value concept and team ability of the leading enterprise, and on the other hand, what the consortium does is in line with the general policy whether it is aimed at "double carbon" or urban renewal.

At the inauguration ceremony of the consortium, Cai Songtao said that the consortium system integrates six major industries, brings together industry leaders extensively, and innovatively implements the trinity development model of green finance, green industry and green operation. Xinyang and the consortium share the same development concept, suitable resource elements, and integrated industrial chains, and there is great potential to work together to promote urban renewal.

"We look forward to replicating Xinyang's model to the whole country faster and promoting the better development of related enterprises." Liao Junhua said.

From "pre-finance model" to "integration of industry and finance"

In urban renewal work, there is a crucial factor – funding. Urban renewal is a long-term operation project that requires a lot of financial support.

"The current situation of financing operational projects for urban renewal is too difficult!" Liu Xiangwen, CEO of Sikong Custom Home Furnishing Technology Co., Ltd., confided in an interview with a reporter from China City Daily before, reflecting the pain points and difficulties of urban renewal work.

A reporter from China City Daily found that at present, the financing methods of domestic urban renewal projects are still mainly financed by fiscal funds, special bonds, PPP (public-private partnership model), F+EPC (financing + design-procurement-construction general contracting model) and other methods.

"Whether it is led by the government or enterprises, most of the current urban renewal funds are still oriented to the traditional infrastructure and real estate development fields, and the main income comes from land consolidation and land appreciation." Liu Xiangwen said.

Tian Li believes that there are many interest games in urban renewal, and the core is the economic game, that is, the balance of costs and benefits.

In practice, the current consensus in the industry is that urban renewal projects should be different from the traditional high-turnover, high-margin real estate development model and asset-backed risk control model. Financial institutions, social capital and industrial capital should look for new opportunities in the new overall solution of urban renewal.

How to inject long-term, stable and low-interest financial vitality into urban renewal projects? In this regard, Guo Xingtian suggested that we should give full play to the guidance, support, and incentives of fiscal policy.

Under the premise of leverage, we should fully guide and drive social capital to participate in urban green and low-carbon renewal and transformation projects, and broaden diversified financing channels for green development, so as to truly activate and operate existing assets, open up new domestic demand markets, and drive new employment and tax revenue. At the same time, we will gradually realize the de-real estate and de-bubble of financial capital.

From "planning leading" to "pre-operation"

"In the era of urban development, as long as the two types of resources such as finance and space are taken care of, we can basically achieve rapid growth. In the era of urban regeneration, finance and space are equally important, but it is also necessary to pay attention to operations, services and asset management thinking, so as to greatly stimulate the vitality of the city. Jiang Man, vice president and chief designer of Vision Group, recently expressed his views in his speech at the first Urban Governance Modernization Forum in 2023, which resonated with many practitioners.

Li Juan, general manager of Dongyuan Zhixin City, holds a similar view: "Urban renewal should change from 'what you want to give you' to 'what you want', so as to configure the corresponding products and content. ”

In daily interviews, a reporter from China City Daily learned that many cities have taken the lead in experimenting and making useful explorations in empowering renewal and transformation with user thinking.

In the early 90s of the 20th century, a large number of ceramic enterprises successively moved out of the urban area of Jingdezhen City, Jiangxi Province, where every inch of land was valuable, resulting in the once glorious porcelain factory buildings idle, and some factories were overgrown with sewage and weeds. In order to realize the protection and utilization of ceramic industrial heritage, Taoxichuan Cultural and Creative Block came into being.

A reporter from China City Daily previously saw in an interview with Taoxichuan that many old factories were well preserved, and there were many of them. From the outside, the old factory buildings, old kilns, chimneys, and water towers are still standing, but their structure, function and business have been completely new - the sand turning workshop is now the "sand turning art museum", the molding workshop has become an intangible cultural heritage, traditional handicraft experience place, and the smelting workshop has been transformed into an art museum, a museum and an entrepreneurial space where young people gather...

It is understood that many well-known artists at home and abroad are invited to reside in the studio every year, and more than 100 artists from all over the world have set up studios.

Zhang Jie, the designer of Tao Xichuan, a national engineering survey and design master, a professor at the School of Architecture of Tsinghua University, and a vice president of the Urban Planning Society of China, said: "We considered the problem from the operation and maintenance side at the beginning of the design. In the process of operation, there must be a specific team and merchants willing to come here, which needs to consider whether each other's interests can be achieved. In fact, the business format of Taoxichuan is constantly adjusted under the concept of cultural protection and inheritance leading green renewal. ”

Zhang Jie further said that the four major types of objects in the national strategy of urban renewal include old communities, old factories, old blocks and urban villages, of which old factories and old blocks are two types of comprehensive goals related to cultural protection and inheritance and functional environment improvement. Focusing on the above objects and goals, in terms of cultural guidance, it is necessary to construct a complete protection element system that reflects the history and culture of Chinese cities. In terms of green renewal, it is necessary to integrate factors such as culture, quality, and carbon emissions, establish a comprehensive index system, and improve the quantitative evaluation method of green renewal.